The E-Myth Revisited (Why Most Small Business Don’t Work and What to Do About It)

The Pinoy Entrepreneurs blog, if you still haven’t noticed, is about, among others, encouraging more Filipinos to become entrepreneurs. It’s about stepping out of one’s comfort zone and starting one’s own business.

You could even say it’s about stirring up the entrepreneurial spirit, focusing on the positive aspects of entrepreneurship, such that talking about negative matters, topics such as the “entrepreneurial myth,” would be a sin.

The entrepreneurial myth is the “myth that most people who start small business are entrepreneurs” or “the fatal assumption that an individual who understands the technical work of a business can successfully run a business that does that technical work.”

These are the definitions of entrepreneurial myth (“E-Myth”) in the book “The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It” (Michael E. Gerber; HarperCollins). Mr. Gerber attributes the root cause of most small business failures to this fatal assumption.

An employee understands the “technical work of a business.” A company accountant, for instance, is expected to know all about accounting. An expert computer technician naturally knows all about computers. We could go on giving illustrations, but the point is that an employee who performs a particular task in a business could become an expert in that field. That expertise could even be of such level that the business couldn’t survive without that employee.

Now, if that employee catches the entrepreneurial bug, perhaps he would think of starting his own business because he has gained expertise in that line of business.

So the company accountant resigns and starts his own accounting firm. The expert computer technician tenders his resignation and starts his own computer shop. Spirits run high. It feels refreshing to be the boss and to go to work anytime you want. No one will give you a show-cause notice, directing you to explain why you should not be disciplined for being late.

However, understanding the “technical work of a business” is totally different from understanding the “business that does that technical work.” Doing business involves capitalization, cash flow, marketing and a host of other factors. A technician-employee is concerned more of doing his job, leaving the problem of looking for clients and marketing to the manager. He receives his salary on a regular basis, leaving the problem of making profit to the manager or business owner (which, by the way, is one of the main reasons why many prefer the “security” of receiving a regular salary as an employee, rather than taking the risks of being an entrepreneur).

In the end, if the “entrepreneur” does not prepare himself for the business, he’ll end up owning a job, and not a business. This defeats the entire exercise of going into business, the purpose of which, as Mr. Gerber puts it, is “to get free of a job so you can create jobs for other people.”

The “technician” who intends to be an entrepreneur would, without understanding the “business that does that technical work,” most likely fail. This basic truth is oftentimes overlooked.

Talking about not-so-positive issues, such as the “entrepreneurial myth,” should never be construed as a “sin”. The entrepreneur, while having a positive outlook on business and life in general, acknowledges his weaknesses and other potential problems, then does something about them. The entrepreneur never disregards the dark side of the force, so to speak.

Now, are you ready to become an entrepreneur?

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